Here’s an excerpt:

EVERY company should have a formal document retention policy, and this policy must be actively enforced. When a company or business is on notice of pending litigation, it is required to implement a “Litigation Hold” to retain any information or documents that the organization reasonably believes are discoverable in the anticipated litigation. Failure to properly implement such a hold can result in large damage claims for the opposing part, as evidenced by the landmark spoliation ruling in Zubulake (Zubulake v. UBS Warburg (“Zubulake V”), 2004 U.S. Dist. LEXIS 13574 (July 20, 2004). Morgan Stanley faced a $1.4 billion award in compensatory and punitive damages stemming from its lack of knowledge about the location of its discoverable information ( Coleman (Parent) Holdings v. Morgan Stanley, 2005 Extra LEXIS 94 (Fla Cir. Ct. Mar. 23, 2005) . Likewise, a company may have email or other electronic records that were excluded by an under-inclusive preservation order, thus opening up the entire catalog of archived electronic records to scrutiny by the courts. Sanctions may be imposed where a party has not only acted in bad faith or gross negligence, but also through ordinary negligence (Residential Funding Corp. v. DeGeorge Fin. Corp. 306 F.3d 99).

This is very useful information for justifying the need to write, implement and enforce your own document retention policy.